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European Commission

Maroš Šefčovič

Vice-President of the European Commission responsible for inter-institutional relations and administration

"Competitiveness, Growth, Employment – what strategy for the EU"

Conference 20 years after the White Paper/Brussels

22 January 2014

Ladies and gentlemen, thank you very much for the opportunity to be here today.

It's hard to believe that it is 20 years since the adoption of the White Paper on growth, competiveness and employment.

Europe was a very different place 20 years ago. There were just 12 Member States, the Berlin Wall had fallen only a few years earlier and the countries that had been behind it for so long were already beginning their decade-long journey to full EU membership.

But if today's geopolitical landscape is very different from that of the early 1990s, at the socio-economic level there are still many similarities.

Growth, competiveness, employment: these are still issues that are at the very top of the EU political agenda.

In December 1993, when the White Paper was adopted, EU12 unemployment levels stood at 17m (around 11% of the working population), while current unemployment levels are around 26.5m – (almost the exact same percentage of the working population, taking into account the total population increase of around 140m as a result of enlargements).

Not surprisingly, the European Council conclusions from 1993 sound very much the same as those of 2013 – "unacceptably high levels of unemployment", "determination to restore confidence", "a clear strategy to restore sustainable growth", "reinforce the competitiveness of European industry". [These are all taken directly from the June/December 1993 Council conclusions]

So does this mean that the White Paper adopted 20 years ago was worthless? That it achieved nothing? Of course not!

Unemployment levels might be similar now to what they were then, but they have not remained at that level for 20 years! The strategies adopted by the EU over the past two decades have borne fruit – even if the current economic and financial crisis has sadly undone or set back much of their good work.

But even that is changing.

According to the latest analysis from the Commission's Autumn 2013 economic forecast, Europe's economy is returning to growth, albeit slowly and modestly.

Economic growth is forecast to gradually gather pace, to 1.4 % in the EU and 1.1 % the euro area in 2014, reaching 1.9 % and 1.7 % in 2015, respectively.

And what it is that has brought about this recovery, and that will allow it to strengthen in the years to come? In no small part, it is the significant structural reforms and fiscal consolidation carried out across the EU over the last few years – the very same reforms that were highlighted 20 years ago in Jacques Delors' White Paper.

Look at the progress made in countries such as Ireland, Spain, Portugal and Greece. Barely a year ago, many people were predicting the end of the euro, or of the EU itself – at the very least, Greece was expected to be forced out of the single currency to protect the rest of the Eurozone.

And yet none of this happened. Ireland has already got itself back on track and the other programme countries continue to make steady progress, thanks to the sacrifices of their citizens and governments – and to their commitment to making the necessary economic and societal reforms.

It is still too early to declare a complete victory, however: unemployment remains at unacceptably high levels, just as it was in 1993. That’s why we must continue working to modernise the European economy, for sustainable growth and job creation.

The title of this panel discussion is "what strategy for growth and innovation". It's a perfectly valid question, of course – but it is one to which we already have the answer.

It's the Europe 2020 strategy.

In many ways, Europe 2020 is a direct descendant of the White Paper; it marks the continued determination of the EU and its Member States to make the necessary structural changes to stimulate economic growth, boost competitiveness and create jobs.

There are some who might say that the fact that this is still an issue 20 years on means that we have failed at the European level to make an impact.

It could be argued that the Lisbon Strategy, the previous 10-year plan (from 2000-2010) which set the target of making Europe the world's most competitive economy by the end of the first decade of the 21st century, did not live up to these ambitious expectations

There are many reasons for that – not least of which of course is the 2008 credit crunch and global economic meltdown.

But it is also widely recognised that there was not sufficient ownership of the strategy at national level; that the words were not backed by deeds.

Everyone agreed that widespread structural reforms were necessary but how to implement them at the national level proved a far more difficult thing to agree upon.

But I do not think that the strategy failed as such, or that Europe has stood helpless for 20 years watching its competitiveness disappear down the drain.

If Europe has changed immeasurably over the last 20 years, then so has the rest of the world. We've seen the coining of a new word to describe a new phenomenon: globalisation.

European competitiveness is no longer just measured against its traditional international rivals such as the US or Japan; the last two decades have witnessed the rise of the BRICs, of new global economic superpowers, in particular of course China, that bring new opportunities for Europe but also pose new challenges.

This is not to say that the EU is becoming less competitive – far from it. The latest global competitiveness report from the World Economic Forum shows that of the world's top 10 competitive nations, five are from the EU (Finland 3rd, Germany 4th, Sweden 6th, Netherlands 8th and UK, 10th). The US is 5th and Japan 9th. If you look at the top 30 countries, there are 11 Member States included (previous five plus Denmark, Austria, Belgium, Luxembourg, France and Ireland), all of which are more competitive than China – which is 29th.

But maintaining and improving that global competitiveness, and extending it to all 28 Member States, is why we still need an EU strategy.

Europe 2020 is not there because the Lisbon Strategy or the measures introduced as a result of the 1993 White Paper have failed. Rather, it is there to ensure that the successes of the past 20 years are not undermined by the new world order.

It is not a replacement for the previous strategies, but an evolution that takes into account the 'new normal' created by the effects of the global economic crisis.

To measure progress in meeting the Europe 2020 goals, 5 headline targets have been agreed for the whole EU, which were then translated into national targets in each EU country, reflecting different situations and circumstances.

These targets are

  • 75% of the 20-64 year-olds to be employed

  • 3% of the EU's GDP (public and private combined) to be invested in R&D/innovation

  • greenhouse gas emissions 20% (or even 30%, if the conditions are right) lower than 1990

  • 20% of energy from renewables

  • 20% increase in energy efficiency

  • Reducing school drop-out rates below 10%

  • at least 40% of 30-34–year-olds completing third level education

  • at least 20 million fewer people in or at risk of poverty

  • We're making progress on many of these targets already, and in some cases we are already considering revising them.

Take for example the climate change targets: in 2012 we had already cut greenhouse gas emissions by 18% compared to 1990, while the share of renewables in 2012 was already 13%. If we continue at this rate, we will surpass the targets set for 2020 – which is why today the Commission has proposed setting new ones for 2030 – a 40% cut in greenhouse gas emissions, and 27% target for renewables at the EU level.

These ambitious new targets underline just what we can achieve if we remain committed, and maintaining those high levels of commitment is one of the main reasons behind the introduction of a rigorous annual assessment of the progress we have made towards implementing Europe 2020.

This annual economic policy coordination exercise is known as the European Semester, a series of rendezvous throughout the year at both national and EU level designed to ensure not only that the actions taken are the right ones, adapted to the current economic and social conditions, but also that the pace of reform is maintained.

It allows us to agree at EU level on the measures that need to be carried out at the national one, to make sure that every Member State continues on the path towards the shared goal of smart, sustainable and inclusive growth.

The 2014 Annual Growth Survey adopted by the Commission in November marked the start of the fourth European Semester, and included a review of the positive impact that has already been made in the first three years, with deficits halved and many major reforms already begun or even concluded.

The AGS also repeats the call for strengthening national ownership of the country specific recommendations, by involving national parliaments and other national actors more in the process to ensure key reforms are understood and accepted.

This is something that I have personally stressed many times in my visits to and meetings with national parliaments over the last four years, and it remains a vital part of the reform process.

The National Reform Programmes that each Member State must submit to the Commission in April each year are far more likely to be effective in responding to the real and specific needs in each EU country if they are coherent with national strategies in the same areas and driven by demand from national parliaments.

These reforms will of course take time to really make an impact – we can see that clearly from the fact that we are still talking about their importance 20 years on from the adoption of the White Paper!

But that makes it all the more important for us to get them right now

It is arguable that the EU's failure to act swiftly and effectively on reforms since 1993 in many ways contributed to – or at the very least compounded – the effects of the 2008 financial crisis.

We have acted swiftly and effectively on economic governance issues; the measures agreed via the 2-pack, the 6-pack, the fiscal compact and so on should ensure that Europe's finances are stronger and more resilient than ever before.

But these are only part of the picture: that's why in June 2012 Member States also adopted a Compact for Growth and Jobs, in an effort to bring together the disparate elements of economic governance, Europe 2020 and the European Semester into a more coherent and effective approach.

There are many different elements to the compact, but let me just touch briefly on a few of them:

Boosting employment, particularly among young people is a key priority, with around €8 billion set aside to promote jobs for young people under the Youth Employment Initiative, and Member States will adopt Youth Guarantees that will ensure that all young people under 25 years of age receive an offer of employment, continued education, an apprenticeship or a traineeship within a period of four months of becoming unemployed or leaving formal education.

There are also new initiatives to help young people find jobs across borders, for example by raising awareness of the job-mobility portal EURES which currently provides access to over 1.4 million job vacancies and almost 31,000 registered employers across the EU.

There is also the Erasmus+ programme, which promotes cross-border vocational training, and a new European Alliance for Apprenticeships which aims to improve the quality and supply of apprenticeships across the EU.

Deepening the single market is a key factor in promoting growth and jobs, and the compact pledges to complete the digital single market by 2015, complete the internal energy market in 2014, to reduce the regulatory burden at both EU and national levels and to explore the potential for jobs in the green economy, among others.

In the compact, Member States agreed to use the EU budget more efficiently for growth and job creation, especially in the areas of research, education and green technologies.

For example, nearly 14% of the new seven-year EU budget that came into force on 1 January this year will be spent on measures designed to boost competitiveness and create jobs and growth.

That's €125.6bn by the end of 2020 from the central EU budget to support and develop programmes and projects across Europe in fields as diverse as energy, research, education and transport.

Take research, for example: the Horizon 2020 programme is the biggest ever EU Research and Innovation programme ever with nearly €80 billion of funding available over the seven years.

Research is seen as clear driver of growth and jobs, an investment in our future, and the ultimate goal is to ensure Europe produces world-class science, removes barriers to innovation and makes it easier for the public and private sectors to work together in delivering innovation.

This investment must also go hand-in-hand with improvements to Europe's education system, to ensure that future generations of Europeans have the right skills to match the labour market requirements and thus ensure sustainable economic growth.

Another example: €2.3bn has been set aside under the COSME programme specifically to improve competitiveness among SMEs, which provide two-thirds of private sector employment in the EU and create 80% of all new jobs.

EU funds can also be leveraged even further by SMEs through the use of innovative financing programmes run jointly by the European Commission and the EIB.

The JEREMIE programme, for example, allows national and regional authorities to use their EU structural and social fund allocations in the form of market-driven financial instruments instead of offering grants.

Unlike grants, which can only be spent once, a pool of funds can be re-invested several times. These investments can take the form of a variety of instruments, from guarantees and micro-loans to export‑credit insurance and venture capital – tools that can really help SMEs build their businesses and maximise the support that they receive at the EU level.

Ladies and Gentlemen

It is widely considered that the EU's greatest achievement is 60 years of peace – as recognised by the Nobel Peace Prize awarded in 2012.

Of course, it is important that Europe continues to bring peace, not only to our own continent but to those places in the world where conflict still rages as well.

As we commemorate the 100th anniversary of the start of the First World War in 2014, it's clear that Europe faces different challenges.

Not least of these is the crisis of faith in the EU leadership – our ability to tackle the big issues of the day effectively and quickly.

I hope that I've been able to show that we are indeed doing that – for the most part – but that the nature of the reforms we need to make mean that positive results are still hard to see.

That's perhaps why a recent Gallup poll by revealed that approval for the EU leadership is above 50% in only four EU countries: Belgium (56%), Denmark (50%), Germany (59%) and Luxembourg (67%).

Approval in the countries hardest hit by the crisis was particularly low: just 19% in Greece, 21% in Cyprus, 27% in Spain and 31% in Portugal (31%).

And it's also why we need to maintain our current momentum.

It may have taken us nearly two decades to start to sort out the problems highlighted in the White Paper of 1993 but we are, now, finally doing so.

I firmly believe that the policies and programmes we now have at our disposal, the policies that have been agreed and endorsed by every Member State, have indeed set us on the road to smart, sustainable growth.

It is our job to make sure that we don't fail the citizens of Europe by deviating from that path.

Thank you for your attention

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